Opinion
IP 01-0505-C-T/G
September 6, 2001
ENTRY ON DEFENDANTS' MOTION TO DISMISS FIRST AND FOURTH CLAIMS FOR RELIEF
Though this Entry is a matter of public record and is being made available to the public on the court's web site, it is not intended for commercial publication either electronically or in paper form. The reason for this caveat is to avoid adding to the research burden faced by litigants and courts. Under the law of the case doctrine, the ruling or rulings in this Entry will govern the case presently before this court. See, e.g., Trs. of Pension, Welfare, Vacation Fringe Benefits Funds of IBEW Local 701 v. Pyramid Elec., 223 F.3d 459, 468 n. 4 (7th Cir. 2000); Avitia v. Metro. Club, Inc., 49 F.3d 1219, 1227 (7th Cir. 1995). However, a district judge's decision has no precedential authority, and therefore, is not binding on other courts, on other judges in this district, or even on other cases before the same judge. See, e.g., Howard v. Wal-Mart Stores, Inc., 160 F.3d 358, 359 (7th Cir. 1998) ("a district court's decision does not have precedential authority"); Malabarba v. Chicago Tribune Co., 149 F.3d 690, 697 (7th Cir. 1998) ("district court opinions are of little or no authoritative value"); United States v. Articles of Drug Consisting of 203 Paper Bags, 818 F.2d 569, 571 (7th Cir. 1987) ("A single district court decision . . . has little precedential effect. It is not binding on the circuit, or even on other district judges in the same district."). Consequently, though this Entry correctly disposes of the legal issues addressed, this court does not consider the discussion to be sufficiently novel or instructive to justify commercial publication of the Entry or the subsequent citation of it in other proceedings.
Defendants, Paragon Publishing, Inc., Club Magazine, and Lisa Massaro filed a motion to dismiss Counts I and IV of Plaintiffs', Richard Duncan, William Alfke, and Christopher Hanner, Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs oppose this motion. The court rules as follows.
I. Factual and Procedural Background
Plaintiffs are member of the Indianapolis Fire Department ("IFD") and seek damages resulting from various disciplinary actions taken against them in connection with the publication of interviews and photographs of Hanner with a partially nude model taken at Firehouse Station Number 5. (Compl. ¶¶ 17, 37.) Hanner agreed to the publication of these photographs conditioned upon an agreement that all "identifying marks" of the IFD be removed. (Id. ¶¶ 20-22.)
This was not done and the Defendants published the unedited photographs and articles in June and July of 1999. (Id. ¶¶ 31-32.) The Chief of the IFD then imposed sanctions and penalties on Plaintiffs. Plaintiffs filed suit alleging unjust enrichment, fraud, tortious interference with employment relationships, constructive fraud, punitive damages, equitable estoppel, promissory estoppel, and breach of contract. Defendants have filed a motion to dismiss Counts I and IV, the claims of unjust enrichment and constructive fraud.
II. Motion to Dismiss Standard
Rule 8(a)(2) requires "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed.R.Civ.P. 8(a)(2), that will "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Leatherman v. Tarrant County Narcotics Intelligence Coordination Unit, 507 U.S. 163, 168 (1993) (citation and quotations omitted). When considering a motion to dismiss, the complaint's allegations are accepted as true and viewed in the light most favorable to the plaintiff. See Hentosh v. Herman M. Finch Univ. of Health Sciences/The Chicago Med. Sch., 167 F.3d 1170, 1173 (7th Cir. 1999).
The court must review the plaintiff's statement of the claim to determine whether the plaintiff has set forth facts supporting a cause of action that would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Beam v. IPCO Corp., 838 F.2d 242, 244 (7th Cir. 1988). However, the court is not required to accept legal conclusions, inferences, or allegations unwarranted by the facts as presented in the pleadings. Mid-Am. Reg'l Bargaining Ass'n v. Will County Carpenters Dist. Council, 675 F.2d 881, 883 (7th Cir. 1982). The accepted standard for determining the sufficiency of the complaint does not permit dismissal "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley, 355 U.S. at 45-46. This is a technical determination not based upon the veracity of the facts alleged. The court cannot dismiss a complaint merely because it doubts that the plaintiff can prove the facts it alleges. Neitzke v. Williams, 490 U.S. 319, 327 (1989). Thus, a defendant's motion to dismiss can only be granted if the plaintiff has failed to allege sufficient facts to entitle the plaintiff to relief if the facts alleged are taken as true. "[I]f the plaintiff . . . pleads facts, and the facts show that he is entitled to no relief, the complaint should be dismissed. There would be no point in allowing such a lawsuit to go any further; its doom is foretold." Am. Nurses' Ass'n v. Illinois, 783 F.2d 716, 727 (7th Cir. 1986). Defendants contends that the Plaintiffs' complaint as to Counts I and IV should be dismissed for failure to state claims upon which relief can be granted.
III. Count I — Unjust Enrichment
Defendants' first contention is that Count I of Plaintiffs' Complaint alleging unjust enrichment should be dismissed for two reasons. First, Defendants claim that there is no unjust enrichment in Indiana where there is a contract. Second, Defendants contend that the count must be dismissed because they received no benefit that was not otherwise available to them if the photographs were published in accordance with the alleged confidentiality agreement. Plaintiffs respond that there was no contract between the Plaintiffs and Defendants and that the Defendants received the benefit of using the fire station as a backdrop and the fire equipment as props.
A. Contract
Unjust enrichment is also referred to as quantum meruit, contract implied-in-law, constructive contract, or quasi-contract. It is "a legal fiction invented by the common-law courts in order to permit a recovery . . . where, in fact, there is no contract, but where the circumstances are such that under the law of natural and immutable justice there should be a recovery as though there had been a promise." Clark v. Peoples Sav. Loan Ass'n, 46 N.E.2d 681, 682 (Ind. 1943).
The Restatement of Restitution sets out the theory broadly: "A person who has been unjustly enriched at the expense of another is required to make restitution to the other." Bayh v. Sonnenburg, 573 N.E.2d 398, 408 (Ind. 1991) (quoting Restatement of Restitution § 1 (1937)). Generally, if there is a contract controlling the rights of the parties, there can be no recovery under a theory of unjust enrichment. See Engelbreacht v. Prop. Developers, Inc., 296 N.E.2d 798, 801 (Ind.Ct.App. 1973).
Defendants first contend that the claim for unjust enrichment must be dismissed because "there can be no action for unjust enrichment if there is a contract between the parties covering the subject matter of the dispute." (Defs.' Mem. at 4.) Although there can be no recovery for unjust enrichment and breach of contract, there can clearly be claims for both. As noted by the Seventh Circuit:
The common law doctrine of election of (contract) remedies . . . has two aspects, a procedural and a substantive. The procedural aspect derives from the overriding goal of common law pleading, which was by successive rounds of pleading to narrow the issues until there was just one for trial. . . . It was essential to the attainment of this goal that a party be forbidden to plead in the alternative, for that would generate two or more issues for trial. He must therefore elect his remedy. . . . Common law pleading was superseded long ago, however — in the federal courts by the Federal Rules of Civil Procedure, which expressly abolish election of remedies. Fed.R.Civ.P. 8(e)(2). Those rules of course apply in all federal civil litigation, even if the issue being litigated is one of state law, as noted with specific reference to election of remedies in Koedding v. Slaughter, 481 F. Supp. 1233, 1237 (E.D.Mo. 1979), aff'd, 634 F.2d 1095 (8th Cir. 1980).
In its substantive aspect, however, the doctrine of election of remedies is not affected by the federal rules of procedure. In that aspect the doctrine is a part of the law of remedies rather than of procedural law. It seeks to prevent double recovery. Wynfield Inns v. Edward LeRoux Group, Inc., 896 F.2d 483, 488 (11th Cir. 1990).
Olympia Hotels Corp. v. Johnson Wax Dev. Corp., 908 F.2d 1363, 1371 (7th Cir. 1990). Therefore, Plaintiffs are allowed to plead inconsistent theories, in this case damages for unjust enrichment and breach of contract, but may only be awarded damages on one of these theories.
Plaintiffs claim that it is uncertain whether there was a contract between the two parties and that they have not pleaded a claim based on a contract. (Pls.' Mem. at 4-5.) Plaintiffs have since amended their complaint to allege a breach of contract claim. (Pls.' Am. Compl. at 16.)
B. Measurable Benefit
Defendants also contend that they are entitled to a dismissal on Count I because they have received no benefit from publishing the photographs with the identifying marks of the IFD on them. Plaintiffs counter that the Defendants were allowed to use the photographs, interview the Plaintiffs, and use the firestation as a backdrop.
To prevail on a claim for unjust enrichment, a plaintiff must establish that a measurable benefit has been conferred on the defendant under such circumstances that the defendant's retention of the benefit without payment would be unjust. Bayh, 573 N.E.2d at 408. One who labors without an expectation of payment cannot recover in quasi-contract. Biggerstaff v. Vanderburgh Humane Soc., Inc., 453 N.E.2d 363, 364 (Ind.Ct.App. 1983).
In this case, the Plaintiffs do not maintain that Defendants should not have published the photographs at all, but rather that they should have removed all identifying marks from the photographs prior to publication. Under this theory of liability, the question is whether the failure to remove the marks in some way benefited the Defendants. Arguably, the magazine received some benefit from using the real IFD logos, however, this court does not need to reach this issue because as conceded by the Plaintiffs, they "permitted the photographs and participated in the interviews without any expectation of monetary payment." (Pls.' Mem. at 6.) Indiana law is clear that someone who works without expectation of payment cannot claim unjust enrichment. Biggerstaff, 453 N.E.2d at 364. Therefore, Count I should be dismissed. This order does not preclude the Plaintiffs from repleading this count, but on the present allegations, it seems futile.
IV. Count IV — Constructive Fraud
Defendants also claim that Count IV should be dismissed because the Plaintiffs have not alleged any facts supporting a special relationship necessary to sustain a claim for constructive fraud. Plaintiffs respond that there was a confidential relationship between Plaintiffs and Massaro, that Massaro was the dominant party in the relationship because of her exclusive rights to control and edit the content of the magazine, and that they placed "great trust and confidence that Massaro would not breach their confidence." (Pls.' Mem. at 5.) Their argument appears to be based on the idea that the Plaintiffs were Massaro's confidential sources and that "they were persuaded that she possessed certain integrity as a journalist." (Id.)
The elements of constructive fraud are: (1) a duty owing by the party to be charged to the complaining party due to their relationship; (2) violation of that duty by the making of deceptive material misrepresentations of past or existing facts or remaining silent when a duty to speak exists; (3) reliance thereon by the complaining party; (4) injury to the complaining party as a proximate result thereof; and (5) the gaining of an advantage by the party to be charged at the expense of the complaining party. Rice v. Strunk, 670 N.E.2d 1280, 1284 (Ind. 1996).
Law infers the fraud in constructive fraud from the relationship of the parties and the circumstances that surround them. Sanders v. Townsend, 582 N.E.2d 355, 358 (Ind. 1991). A breach of a legal or equitable duty within the context of a fiduciary relationship may give rise to a cause of action for constructive fraud. Sanders, 582 N.E.2d at 358. In Westphal v. Heckman, the Indiana Supreme Court stated:
There are certain legal and domestic relations in respect to which the law raises a presumption of trust and confidence on one side and a corresponding influence on the other. The relations of attorney and client, principal and agent, husband and wife, and parent and child belong to this class and there may be others.113 N.E. 299, 301 (Ind. 1916), superceded on other grounds by statute as stated in In re Estate of Banko, 622 N.E.2d 476, 479-80 (Ind. 1993); see also In re Estate of Neu, 588 N.E.2d 567, 570-71 (Ind.Ct.App. 1992) (classifying the relationships of attorney and client, guardian and ward, principal and agent, pastor and parishioner, husband and wife, and parent and child as confidential).
The relationship between the Plaintiffs and Massaro in no way rises the level of those described above or that needed to impose a duty upon Massaro under the law of constructive fraud in Indiana. The relationships necessary to impose a duty under constructive fraud law require either a close personal relationship (i.e., husband and wife or parent and child) or a legal relationship in which trust is exchanged (i.e., attorney and client or principal and agent). None of these is present in the current situation where Massaro was the editorial manager for a magazine that interviewed and photographed the Plaintiffs. There is no presumption of trust and confidence in the relationship between business acquaintances or the editor and subject of a magazine article.
The parties arguably had a contractual relationship, which in any event does not give rise to a fiduciary relationship creating a duty. Morgan Asset Holding Corp. v. CoBank, ACB, 736 N.E.2d 1268, 1273 (Ind.Ct.App. 2000). This is not the case where the "acts or course of conduct which, if sanctioned by law, would, either in the particular case or in common experience, secure an unconscionable advantage, irrespective of the existence of evidence of actual intent to defraud." Leader Publ'g Co. v. Grant Trust Sav. Co., 108 N.E. 121, 124 (Ind. 1915). Plaintiffs allege that there was "a fiduciary, confidential, or special relationship between Defendants and Plaintiffs." (Compl. ¶ 58.) However, this court is not required to accept legal conclusions unwarranted by the facts as presented in the pleadings. Mid-Am. Reg'l Bargaining Ass'n v. Will County Carpenters Dist. Council, 675 F.2d 881, 883 (7th Cir. 1982).
Plaintiffs allege that a confidential relationship existed between Plaintiffs and Massaro because Massaro was in a dominant position and Plaintiffs were justified in relying on her promises to remove the IFD identifying marks. Although,
[a] confidential relationship exists whenever confidence is reposed by one party in another with resulting superiority and influence exercised by the other[,] . . . [n]ot only must there be confidence by one party in the other, but the party reposing the confidence must also be in a position of inequality, dependence, weakness, or lack of knowledge. . . . Furthermore, it must be shown that the dominant party wrongfully abused this confidence by improperly influencing the weaker so as to obtain an unconscionable advantage.
Paulson v. Centier Bank, 704 N.E.2d 482, 490 (Ind.Ct.App. 1998).
Accepting all Plaintiffs' factual allegations as true, they have not alleged any facts that would support a fiduciary or confidential relationship and even if there was such a relationship, they have not alleged facts to support that they were in a position of inequality, dependence, weakness, or lack of knowledge and that Defendants wrongfully abused their confidence to obtain an unconscionable advantage. Therefore, their claim for constructive fraud must be dismissed.
V. Conclusion
For the foregoing reasons, the Defendants' Motion to Dismiss Counts I and IV of Plaintiffs' Complaint will be GRANTED without prejudice. A final order of dismissal will be entered as part of the judgment that is entered at the conclusion of this case, pursuant to Federal Rule of Civil Procedure 58.